Sri Lanka’s Sugar buddies

President Sirisena or Prime Minister Wickremesinghe, or for that matter former

President Mahinda Rajapaksa, cannot so easily exonerate themselves from their
general record of protecting bribe takers and corruption beneficiaries, and
allegations of their own implications in some of them.

by Rajan Philips- May 6, 2018

( May 6, 2018, Colombo, Sri Lanka Guardian) For starters today, I was planning
this secular prayer: Let us first say thanks for small mercies – for keeping Ravi
Karunanayake out of the cabinet in last Tuesday’s reshuffle. Two days later the
thunderbolt struck –the President’s Chief of Staff and the Timber Corporation
Chairman caught counting bribe cash in the carpark at Taj Samudra. How
brazen has corruption become? We knew it had already climbed high. But
thanks again for small mercies – to the Bribery Commission officials who
arrested the two government thieves. The Bribery Commission is having better
luck with real time culprits than it has been having with rogues of the past. I will
spare the details of the arrests and the arrestees which are already virally
known, and turn to their inauspicious effects on the new session of parliament
that is scheduled to open on Tuesday, May 8.
Already, the presidential secretariat has exhibited its ineptitude in taking three
trial and error gazette notifications to properly announce the May 8 opening.
Now, President Sirisena will have to acknowledge and address the
embarrassment of the mid-afternoon bribery scandal involving his Chief of Staff
I.M.H. Mahanama and the Chairman of the Timber Corporation P. Dissanayake.
The President has already exonerated himself by interdicting the culprits and
claiming that the arrests of the two men prove that his administration is being
effective in the fight against corruption. What it really proves is that things will
work if the law enforcement officials are given the freedom to do their job
without political interference.
President Sirisena or Prime Minister Wickremesinghe, or for that matter former
President Mahinda Rajapaksa, cannot so easily exonerate themselves from their
general record of protecting bribe takers and corruption beneficiaries, and
allegations of their own implications in some of them. What will the President
say, if anything, on the matter of bringing state criminals to book? Apart from
state corruption, will there be answers to state murders of intrepid journalists
and a young sports star? Will anything happen before the President’s elected
term is over?
The people who thought there would be changes after 2015 are now fed up and
are resigned to the old curse to let ‘there be a plague’ on not just two but, now,
all three houses. The SLPP cannot absolve itself because it has a new
abbreviation. Name change is not rebirth. Its contents are all old stock. The
people are more concerned about their livelihood woes. There is no economic
commentary going around that is positive or rosy, even without the unsolicited
opinions of the former Central Bank Governor. With his past locked in a glass
house, Nivad Cabraal, should stop throwing stones at the current regime. As for
the economists with professional credibility, what they are figuring out in their
heads the people are doubly feeling in their guts.
The economic woes
Sri Lanka’s economy like most national economies can keep growing at what
Nimal Sanderatne calls its ‘autonomous growth’ rate, regardless of what
governments might do to spur or stall growth. But when things go wrong, it is
the government that gets the blame, and rightly so as is the case almost always
in Sri Lanka. The current mainstays of Sri Lanka’s economy – are tourism,
exports led garment and tea and sprinkling of manufacturing and agricultural
products, agriculture with a high proportion of rice production, and remittances
from Sri Lankan workers overseas (90% from the Middle East). Its chronic
problem is the external balance of payments – trying to keep as much foreign
reserves as possible to pay for essential imports, and often measured by the
number of months of import capacity. Encompassing everything is the national
debt which, as Mr. Cabraal has been crowing last week, has grown to historical
highs. This is a pointless argument. Hardly any government has been able to
reverse the debt trend, so every year the country invariably makes history with
its national debt.

The debt and deficits are also

functions of our structural inability to raise revenue levels or reduce non-
discretionary expenditures (e.g. public sector salaries). After about 60 years
when income tax was first introduced, only 7% of the labour force and
companies reportedly pay income tax. And the yahapalanya government with
the gusto of a drunken sailor increased public sector salaries in its first budget in
2015. Few public servants remember that now, because those are less than
crumbs compared to what politicians and officials routinely make in bond
auctions or car park cash transactions.
At the household level, the pinch comes from the shortage, or the rising cost, or
both, of the imported essentials. Aggregate it nationally, shortages and cost of
living have been perennial political predicaments. For the first 35 years after
independence the contentious commodity was imported rice closely bundled
with wheat flour and sugar. Over the second 35 years, rice has been replaced by
fuel. Such was the significance of rice in 1970, that a figurative opposition
promise, “we will bring rice even from the moon” became an election winning
slogan. Rice eventually came and in substantial quantities, not from the moon
but from the island’s paddy fields in the wet zone and in the dry zone.
No one is bold, or mad, enough now to promise to bring fuel from the moon,
and there is no hope for producing petroleum locally. The government is in a
bind to buy fuel globally at rising prices and enable its supply locally at cost that
is affordable to ordinary people. It will be political suicide if the government
were to simply let the market prices determine the cost of local fuel supply.
Equally, it will be economic distortion to subsidize the supply cost of fuel, as it
used to be done with rice. The financial impacts will be significant and the
government will be flouting one of the key conditions of the IMF’s Extended
Fund Facility to Sri Lanka. Commentators like Nimal Sanderatne have suggested
a politically sensitive and economically responsible way out – that is to locally
cushion the impact of rising global oil prices but cut funding elsewhere to make
up the deficit, in the more discretionary areas of government spending, such as
perks and pensions to parliamentarians and other government extravaganzas. It
will be a remarkable shift if the government were to make such a course change
from past practices.
While the present government is drawing much flak, but not unjustifiably, for its
handling of the economy, things were not very different when the Rajapaksas
were in power. In fact, it was often said that more than astrology it was former
President Mahinda Rajapaksa’s fear that the economy would change for the
worse that prompted him to call an early presidential election in January 2015.
As blunders go, there are enough similarities between the two governments
before and after January 2015. As far as the mainstays of the economy go,
neither government did anything spectacular to boost tourism, exports or
agriculture, apart from the 2016 restoration of EU concessions for Sri Lankan
exports. According the annual World Bank overview, Sri Lanka continues to
attract subpar volumes of the coveted FDI compared to peer economies. More
importantly, the same report, suggests that the recent FDI inflow is “due mainly
to the long-leasing of a port asset and a large land reclamation project”, which
are the leasing of the port operations and port lands in Hambantota, and the
Port City development in Colombo. This is only another version of what the
Rajapaksas did with Chinese loans for infrastructure development.
The (UNP) government has little to show for its economic strategies over the last
three years, which were centred on the promise of a million jobs based on a
knowledge-based social market economy, Western Region Megapolis, free trade
with anyone who wanted to talk trade with Sri Lanka, and opening industrial
clusters throughout the country. What the government has been shown in
return is the wrath of the people in the neglected agricultural sector, and mostly
rice producers, who were left literally high and through two full paddy seasons
of extreme drought. Prime Minister Wickremesinghe acknowledged that the
neglect of the country’s agricultural population was a major factor in the UNP’s
crushing defeat in the February local government elections. It will be interesting
to see if the President’s Policy Statement to parliament on Tuesday will signal
anything new that we haven’t seen so far. Or, will it be the same old, same old?
The debate that will follow could be expected to offer clues about the positions
the main political parties will be taking on the economy, the upcoming elections
and constitutional changes.
The countdown
The new sessions will also be the start of the countdown for the final phases of
the political careers of not only President Sirisena and Prime Minister
Wickremesinghe, but also former President Mahinda Rajapaksa. They are the
three crucial political figures and rivals of today. They are also at the tail end of
their political careers. All three of them have choices to make. Two of them,
Sirisena and Wickremesinghe, may want to contest the next presidential
election, which in theory one of them could win, but in reality both of them may
lose. All three of them, on the other hand, have another common choice before
them – and that is to put an end to all future presidential elections by
supporting the JVP’s proposed 20th Amendment to abolish the executive
presidential system in its current form. They will still have one more kick at the
can – to contest the next parliamentary election as the prime ministerial
candidates for their respective parties.
No matter how and where it will end, the JVP’s 20th Amendment proposal has
become a cat among the pigeons in the main political parties. To date, the UNP
and the SLFP including President Sirisena and Prime Minister Wickremesinghe
have not said anything about the JVP’s proposal. The newly minted UNP
Secretary Akila Viraj Kariyawasam has let it be known that Ranil
Wickremesinghe will contest the next presidential election as the UNP candidate
and will win. The SLFP’s group of 16 were once the chief promoters of a second
Sirisena candidacy for President, but it is not clear where they stand now given
their self-selected no man’s land between the Sirisena and Rajapaksa loyalists.
However, the SLFP Secretary Duminda Dissanayake has, like his UNP
counterpart, announced that President Sirisena will be contesting for a second
term as the SLFP candidate.
But both the UNP and the SLFP leaders will have a time explaining to their 2015
allies and the general public why they are going back on their earlier promises
to abolish the executive presidency, and presenting themselves as two opposing
presidential candidates. Already about 40 civil society organizations have
expressed support to the JVP’s proposal. The greater onus to explain will be on
Maithripala Sirisena who vowed to be only a one-term President. They may
have quietly ignored their promises and filed nominations as candidates, but the
JVP’s proposal has set a political trap in their tracks. They will have a great deal
of explaining to do if they choose not to support the JVP’s 20th Amendment.
The TNA also has indicated support for the 20th Amendment provided its
concerns on the ethnic problem are addressed in the amendment package. That
will leave Ranil Wickremesinghe in a particularly awkward spot insofar as the
Tamil votes are concerned. If the TNA supports the JVP amendment and the UNP
opposes it and defeats the amendment, Mr. Wickremesinghewill have a hard
time canvassing the Tamil vote. He may even suffer a second Tamil boycott, but
a totally voluntary one unlike in 2005.
The Rajapaksas and the SLPP have their own set of calculations in coming to
terms with the JVP’s proposal. The No Confidence Motion against the Prime
Minister has already exposed the lines of division in the Rajapaksa camp. Those
who were gung ho about the NCM are the promoters of Gotabhaya Rajapaksa
for presidency. Basil Rajapaksa didn’t think much of the NCM idea; he was more
for forcing the dissolution of parliament to be followed by a general election.
Mahinda Rajapaksa would lead the SLPP to victory and become Prime Minister.
There could even be an outside chance of a different 20th Amendment to rescind
19A and restore 18A. Then Mahinda Rajapaksa could be President again. Even
Mohan Peiris and Nivard Cabraal could return and together with Gotabhaya
Rajapaksa, again helping his brother as the quintessential doer functionary,
they could restore the old Tuesday-Tea triumvirate meeting to mull over state
business.
But Basil Rajapakasa is too sharp a person to miss out on reality through day
dreaming:it is best for the SLPP to focus on early dissolution and a
parliamentary election. The defeat of the NCM also took the air out of the
Gotabhaya balloon. Then came, the JVP’s proposal and the SLPP leadership
decided to test the political winds by letting MP and former Minister) Bandula
Gunawardaneannounce that the SLPP would support JVP’s amendment if it
included the provision for immediate dissolution of parliament. That would
solve two problems for the family and the SLPP. ‘Abolishing’ the executive
presidency would mean that the family doesn’t have to split over choosing a
presidential candidate. And with dissolution and new parliamentary election,
Mahinda Rajapaksa could return to power as Prime Minister and Head of
Government.
There are layers and layers of political pushes and pulls, including admonitions
from the Sangha, not to mention personal agendas and priorities, which
Sirisena, Rajapaksa and Wickremesinghe will have to deal with while deciding
what to do about the JVP’s 20th Amendment. One certainty that we can assure
the three rivals is that if they decide to support the 20th amendment and
facilitate its successful passage, in parliament and in a national referendum,
they will leave behind a very positive political legacy that they, their allies and
progenies can for ever be proud of. Conversely, they should convince themselves
that they are indeed proud of opposing the 20th Amendment before opting to
oppose it.
Posted by Thavam